At Maicher CPA Pllc, we help clients reduce taxes. The end of the 2020 tax year is upon us Want to minimize taxable income, maximize deductions, avoid amended tax returns, and speed up a refund? Here are some useful tips:
- Make Sure Your W-2s and 1099s Are Accurate. By the end of January, most W-2/1099s should be delivered to employees and contractors. These documents can have inaccuracies like overstated wages or inflated payments which will increase your tax liability. Review these reports upon receipt so the payroll/payable department can make corrections long before your return is due in April. Reminder: 1099s are also issued by investment firms and the same need for prompt review for errors applies.
- Gather/Review Documents for Common Deductible Expenses. Be sure to keep documents showing your payment of mortgage interest. For 2020, couples filing jointly may deduct interest payments on $750,000 of qualified home loans. However, if your mortgage arose before December 15, 2017, you can deduct the interest paid on a qualifying loan amount up to $1 million. Concerning IRAs in 2020, taxpayers under 50 may contribute $6,000 per person and those 50 and over may contribute $7,000. Proof of these payments include documents showing the contribution such as cancelled checks or mortgage/brokerage statements.
- Charitable Donations. Deductions apply for qualifying charitable donations. Provide accurate receipts to your accountant to ensure deductions are taken and defend against ay IRS challenges down the road.
- Children Born in 2020. New additions to your family in 2020? Provide your accountant at Maicher with the social security number of such children as proof for tax credits.
- Business Receipts. If you purchased items required to perform your job and your employer did not reimburse the expense, then the item is generally deductible. For the self-employed, many items used to conduct your business may be deductible as well. Examples of such items include, among others: computers, office furniture, marketing/advertising expenses and business mileage (57.5 cents/mile in 2020).
Take-away: Prompt and diligent attention to the above issues will give you the best chance of not overpaying taxes in 2020. Call Maicher today to schedule a meeting to discuss other possible ways to reduce your 2020 taxes and the preparation of your returns.
IRS Publication: Standard Mileage Rates (December 3, 2020).
IRS Publication: IRA FAQs (November 12, 2020).
“4 Tax Deductions That Are Amazing For Homeowners,” Forbes (May 17, 2020).
“How To Maximize Your Mortgage Interest Deduction,” Forbes (June 25, 2020).